Penn State Trustee Sues University for Keeping Critical Financial Records from Him

This story was produced by the State College regional bureau of Spotlight PA , an independent, nonpartisan newsroom dedicated to investigative and public-service journalism for Pennsylvania. Sign up for our north-central Pa. newsletter, Talk of the Town, at spotlightpa.org/newsletters/talkofthetown .

BELLEFONTE — A Penn State trustee is suing the board for allegedly withholding information about how the university manages its $4.6 billion endowment, which provides financial stability for the institution and includes donations intended to benefit Penn State and its students.

The lawsuit was filed days before the trustees’ July meeting in Altoona and comes as Penn State plans steep budget cuts and pays some employees to leave . It is also the latest in a series of public grievances by board members about university operations.

Barry Fenchak, an alumni-elected trustee, said that university leaders and fellow trustees have blocked him for years from reviewing data he requested, including details about what assets Penn State has and administrative fees charged to those holdings.

In his lawsuit, filed Tuesday in the Centre County Court of Common Pleas, the trustee cited Pennsylvania’s nonprofit law that allows directors to review or request information on an organization’s assets.

Fenchak accused some trustees of telling him that he would “never be given that information” and that he should not ask questions, according to the filing. He is not seeking monetary damages but is asking the court to force the Penn State board to provide him with the data.

Taking legal action was his only option after years of requests, Fenchak told Spotlight PA. And while his lawsuit is focused on the endowment, he said the situation indicates larger problems in Penn State’s board.

Information trustees need to make decisions is “either not readily available or is flat out denied,” Fenchak said.

Penn State did not return a request for comment. The university has typically declined to comment on pending litigation.

Fenchak is a licensed investment advisor who was elected to the board in 2022 on a platform of fiscal responsibility. As a candidate for the board, he said some trustees do not take their responsibility seriously and otherwise view it as “an excuse to get together for dinner.”

He is an outlier on Penn State’s board — someone who regularly asks questions during public meetings or describes his position before voting. Fenchak voted against several notable proposals, including an increase to President Neeli Bendapudi’s compensation package because he said her pay was not tied to measurable performance metrics .

Tension between Fenchak and trustee leaders has been apparent for more than a year. In May 2023, board chair Matt Schuyler scolded Fenchak for making comments during a public meeting. He is the only trustee not appointed to a board committee. According to the lawsuit, board leaders have previously censured him and removed his “board social privileges.”

After joining the board, Fenchak asked to review details about Penn State’s endowment, which provides revenue for university operations and totaled $4.6 billion in fiscal year 2023, according to the university’s development office . Fenchak was concerned about what he viewed as a dramatic rise in administrative fees between 2016 and 2023, according to the lawsuit.

“It may be worth noting that I can, and have, received greater detail from other Big Ten public universities (even though I have no relationship with any of those universities) than I have from [Penn State],” he wrote in a February email and attached to the lawsuit.

Fenchak claims he has only received aggregated financial data from Penn State. He said the information was similar to what was publicly available on Penn State’s tax forms and was “of use in identifying the existence of causes for concern — but not in addressing those causes of concern,” according to an April letter Fenchak sent to university leaders and attached to the lawsuit.

“The refusal to allow access to information would make it impossible for a fiduciary of the University to uncover even the most blatant improprieties,” Fenchak wrote. The trustee emphasized he did not have evidence of financial wrongdoing but wanted more information to better evaluate how the money is managed and whether changes could be made to maximize the financial return to the university.

Penn State trustees are responsible for creating or changing the university’s fiscal policies as well as maintaining the university’s well-being, according to the board’s governing documents.

Schuyler, the board chair, and David Kleppinger, vice chair, told Fenchak the data he sought went “beyond that which is necessary” for a trustee and that the information was confidential for all except “those exercising a fiduciary oversight role,” according to a letter attached to the lawsuit.

The state law Fenchak cited in his legal filing allows organizations to restrict what information is provided to directors but, if there is a dispute over these restrictions, “the corporation has the burden of proving reasonableness.”

Penn State is largely exempt from Pennsylvania’s open records law. According to the board’s governing documents , the university defines “confidential information” as any information about Penn State that is not public.

Other trustees have access to the information Fenchak seeks, according to the lawsuit. Some current and former trustees, as well as top university leaders, make up the Penn State Investment Council which oversees the endowment.

Internal board operations have garnered media attention in recent months, including the series of private meetings to discuss naming the university’s football field after former coach Joe Paterno and board leadership admonishing the trustee who led the failed proposal.

In May, the board approved a $700 million renovation of Beaver Stadium. The Wall Street Journal reported that board leaders privately told Fenchak that his request for financial data related to the renovation was “in contravention of Board policy.”

For years, media law experts have questioned the Penn State trustees’ operations and transparency. Spotlight PA has documented a decadelong pattern of the board convening behind closed doors.

In December, the newsroom sued the board for alleged violations of Pennsylvania’s open meetings law . In June, a judge ruled that Spotlight PA could update its lawsuit to include additional allegations related to disclosures made during the board’s May meeting . The case is ongoing in the Centre County Court of Common Pleas.

SUPPORT THIS JOURNALISM and help us reinvigorate local news in north-central Pennsylvania at spotlightpa.org/donate/statecollege . Spotlight PA is funded by foundations and readers like you who are committed to accountability and public-service journalism that gets results.

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